Study on comparative balance sheet in Airtel

By Harsh Jain (Reg. No.-5130) Of VISHWA VISHWANI INSTITUTE OF SYSTEMS AND MANAGEMENT Under the Guidance of Prof. Bhagya Rao (Faculty of finance management and control)

A PROJECT REPORT Submitted to the FACULTY OF BUSINESS MANAGEMENT In partial fulfillment of the requirements For the award of the POST GRADUATE DIPLOMA IN MANAGEMENT JULY, 2010

DECLARATION:

I Harsh Jain hereby declare that this project titled Study on comparative balance sheet in Airtel is an original work carried out by me, under the guidance of Professor Bhagya Rao (faculty of financial accounting for managers). The report submitted by me is a bonafide work carried by me of my own efforts and it has not been submitted to any other university or published any time before.

Date: Place:

Signature of student (Harsh Jain)

CERTIFICATE FROM GUIDE:

Certified that this project titled Study on comparative balance sheet in Airtel is the bonafide work of Harsh Jain, who carried out the research under my supervision, certified further, that to best of my knowledge the work reported here is does not form part of any other thesis or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Signature of faculty guide

Date: Place:

(Prof. Bhagya Rao)

ACKNOWLEDGEMENT:

I had sincerely expressed my ineptness & gratitude towards Mr. A. Salan (owner) of Paramount Communication (AIRTEL), Hyderabad, for giving me an opportunity to join this esteem organization for 45 days of summer training. My summer training in Paramount Communication (AIRTEL), Hyderabad, of duration 45 days has been quite successful. During my stay for 45 days, I had received full co-operation from employees and officers of the Paramount Communication (AIRTEL). The practical visualization of the summer training has helped me to understand a lot of practical things.

In order to acquire myself to the task of the organization and to analyze them, I met staff who helped by their kind co-operation and guidance. During the training they have been giving the practical knowledge.

I would be special thanks to our college faculty Mrs. Sunitha Ratnakaram (stp coordinator & marketing faculty) Mr. Bhagya Rao (project guide & faculty of financial management control) under supervision this topic. This Acknowledgement would be incomplete if I fail to express my deep gratitude towards all the facility of Vishwa Vishwani Institute of Systems And Management who gave me a lot of support and guidance. Last but not least I would be special gratitude to our all friends who heartening me to complete this project.

CONTENT PAGE:

1. EXECUTIVE SUMMARY 2. INTRODUCTION 3. OBJECTIVES 4. NEED OF THE STUDY 5. SCOPE 6. LIMITATIONS 7. RESEARCH METHODOLOGY 8. COMPANY OVERVIEW 9. INDUSTRY OVERVIEW 10. SWOT ANALYSIS 11. LITERATURE REVIEW 12. DATA ANALYSIS 13. CONCLUSION 14. BIBLIOGRAPHY

6 7-8 9 10 11 12 13 - 15 16 - 32 33 - 34 35 - 37 38 - 45 46 - 61 62 - 63 64 - 65

EXECUTIVE SUMMARY:

The project aims at understanding the financial strategies of Airtel and its impact on the perception of Airtel Cellular Services. The focus of my research was the measurement of comparative analysis of Airtel. The research was done for the corporate clients of Bharti Airtel. This project is based on Balance sheet and profit and loss accounts of the Airtel. It is done to find out whether the Airtel are improving our capital structure or not. Further, in this Project: Chapter 1: includes Objectives of the study, need for the study, and scope and limitations of this project. Chapter 2: includes the Research Methodology wherein I have discussed the Research Design and Various sources of the Data Collection. Chapter 3: includes company overview, industry overview and literature review. Chapter 4: includes the Data analysis and Findings wherein I have analyze the data collected from the departmental records, annual reports and web site records. Chapter 4 represents the conclusion and the suggestions based on the departmental records and annual report. Chapter 5: Bibliography.

CHAPTER 1:

INTRODUCTION

This project is related with a topic of to study analyses comparative balance sheet in Airtel. The main importance of study is to find out whether the Airtel is improving in their capital structure or not. It also helps to know the environment and how they are improving by the performance of particular years. And this topic really helps when we know something about in which area Airtel is improving like current assets are more than current liabilities or not etc. in this project, I also know that what is the telecommunication?

Telecommunication is the transmission of messages, over significant distances, for the purpose of communication. Telecommunications play an important role in the world economy and the worldwide telecommunication industry's revenue was estimated to be $3.85 trillion in 2008. The service revenue of the global telecommunications industry was estimated to be $1.7 trillion in 2008, and is expected to touch $2.7 trillion by 2013.

I also know about the strategies of different service providers in telecom. By this project I got some information about market strategies of different service providers to provide better services to customers and they also play a game plan to beat another service provider in particular area like Tata DoCoMo play a plan for the customers as a one paise per second by this strategies other service providers giving some different offers to the customers.

This project really helps to me as a finance student to get a better experience by working one of the best telecom company and no. 1 choice in Andhra Pradesh area. And I have a great experience to work with Airtel and know the market strategies as well as financial strategies of company. I done first time comparative analysis in company so, according to me its really a nice work.

OBJECTIVES:

As a management student I need to understand the overview of an Organization in its Financial, Marketing and Human resource Performance examining the overview of the above factors will help a student like me to gain insight in the Mission, Vision and Operational Goals and Strategies of Organization to perform well to the satisfaction of its stake holders. And these operational goals would really help in future to understand the mission and vision of us. The basic objective of doing this project is to analyze the financial statements of a company, analyze the environment in which it is operating and evaluate its performance over the last two years. Hence a thorough environment industry and company analysis is done to understand the external factors influencing the company. The title of my project is study on comparative balance sheet in Airtel. The objectives are: y y y y y Through this I am able to get the difference of various assets and liabilities of the Airtel. Comparative study of three year annual reports. To study the various departments for come to know all condition of Airtel in Hyderabad. To analyze the financial statements of three years in Airtel. To analyze the balance sheet of three years after analyzing financial statement (profit and loss account) y To prepare a comparative balance sheet of Airtel from comparing the balance sheet of three years.

NEED OF THE STUDY:

Need of the study are: y y To find out the financial position of Airtel. This report will let us know the factors responsible for the changing assets and liabilities mix of Airtel. y This study gave some knowledge about the company and their financial position in the market by preparing financial statement of three years. y It also helps to me for taking experience by analyzing financial statement and comparative balance sheet of a particular company. y This study gave some information about how to prepare financial statement like profit & loss and comparative balance sheet of a company.

SCOPE OF THE STUDY:

The scope of company analysis is limited to one company Bharti Airtel, to know its performance, by analyzing the secondary data from various sources and understanding them. The scope of company analysis is to find out only three years profit and loss and balance sheet and find out some comparison between them.

LIMITATIONS OF THE STUDY:

Some limitations are as follows: y As it is a private company, some of the information kept confidential and was not disclosed for the study. y All the information was collected from companys balance sheet which has its inherent limitations. y y There were time constraints I have to complete it in limited time. There were too much workload on the employees, thus they hardly manage time to give relevant information in details. y y There may be a personal biased involved, which can effect on conclusion. Different accounting policies may be used by different companies or within the same company at different points in time. Adjustments made such differences.

CHAPTER 2

RESEARCH METHODOLOGY

Research:
The research design of this project is exploratory. Though each research study has its own specific purpose but the research design of this project on Airtel is exploratory in nature as the objective is the development of the hypothesis rather than their testing.

The research designs methods of financial analysis. Through of comparative balance sheet in comparative statement, I am studying on balance sheet of Airtel of three year. So taking comparative statement, I am going too analyzed of three years balance sheet of Airtel.

Methodology:
Every project work is based on certain methodology, which is a way to systematically solve the problem or attain its objectives. It is a very important guideline and lead to completion of any project work through observation, data collection and data analysis.

Research Methodology comprises of defining & redefining problems, collecting, organizing & evaluating data, making deductions & researching to conclusions. -According to Clifford Woody,

Accordingly, the methodology used in the project is as follows: Defining the objectives of the study Framing of questionnaire keeping objectives in mind (considering the objectives) Feedback from the employees, Analysis of feedback, Conclusion, findings and suggestions.

Sampling technique used:

This research has used convenience sampling technique.

Sampling technique:
Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient.

Selection of sample size:

Taking sampling survey in Airtel by visiting each department.

Sources of data collection:

Research will be based on two sources: y y Primary data. Secondary data.

1) Primary data: Primary data was collected by departmental survey from Airtel. 2) Secondary data: Secondary data will consist of different literatures like books which are published, articles, internet, the company manuals, and websites of company (www.Airtel.com). In order to reach relevant conclusion, research work needed to be designed in a proper way. This research methodology also includes:    Familiarization with the concept of finance and its various merits and demerits. Through the study of the information collected. Conclusion based on findings.

CHAPTER 3: COMPANY OVERVIEW

Bharti Airtel Limited was incorporated on July 7, 1995 for promoting investments in telecommunications services. Its subsidiaries operate telecom services across India. The businesses of Bharti Airtel are structured into two main strategic groups - Mobility and Infotel. The Mobility business provides GSM mobile services in all 23 telecommunications circles in India, while the Infotel business group provides telephone services and Internet access over DSL in 15 circles. The company complements its mobile, broadband, and telephone services with national and international long-distance services. The company also has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. Bharti Tele-Ventures provides end-to-end data and enterprise services to corporate customers by leveraging its nationwide fibrotic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and international bandwidth access through the gateways and landing station. All of Bharti Tele-Ventures' services are provided under the Airtel brand. As of September 2005, Bharti Tele-Ventures was the only company to provide mobile services in all 23 telecom circles in India. By the end of October 2005, Bharti Tele-Ventures was serving more than 14.74 million GSM mobile subscribers and 1.10 million broadband and telephone (fixed line) customers. The equity shares of Bharti Tele-Ventures are currently listed on the National Stock Exchange of India Ltd (NSE) and the Stock Exchange, Mumbai (BSE). As of September 30, 2005, the main shareholders of Bharti Tele-Ventures were: Bharti Telecom Ltd (45.65%), a subsidiary of Bharti Enterprises; Singapore Telecom (15.69%), through its investment division Pastel Ltd; and, Warburg Pincus (5.65%), through its investment company Brentwood Investment Holdings Ltd). Other shareholders with more than a 1% stake were:

Citi Group Global Markets Mauritius Pvt Ltd (2.99%); Europacific Growth Fund (2.04%); Morgan Stanley & Co International Ltd (1.93%); CLSA Merchant Bankers Ltd A/C Calyon (1.33%); Life Insurance Corporation of India (1.34%); and, The Growth Fund of America Inc (1.11%). Sunil Bharti Mittal, the founder-chairman of Bharti Enterprises (which owns Airtel), is today, the most celebrated face of the telecom sector in India. He symbolizes the adage that success comes to those who dream big and then work assiduously to deliver it. Sunil Bharti Mittal began his journey manufacturing spare parts for bicycles in the late 1970s. His strong entrepreneurial instincts gave him a unique flair for sensing new business opportunities. In the early years, Bharti established itself as a supplier of basic telecom equipment. His true calling came in the mid-1990s when the government opened up the sector and allowed private players to provide telecom services. Bharti Enterprises accepted every opportunity provided by this new policy to evolve into India's largest telecommunications company and one of India's most respected brands. Airtel was launched in 1995 in Delhi. In the ensuing years, as he Airtel network expanded to several parts of India, the brand came to symbolize the very essence of mobile services. Product Airtel provides a host of voice and data products and services, including high speed GPRS services. Airtel also offers a wide array of 'postpaid' and 'prepaid' mobile offers, with a range of tariff plans that target different segments. A comprehensive range of value-added, customized services are part of the unique package from Airtel. The company's products reflect a desire to constantly innovate. Some of these are reflected in the fact that Airtel was the first to develop a 'single integrated billing system'

Airtel comes to you from Bharti Airtel Limited - a part of the biggest private integrated telecom conglomerate, Bharti Enterprises. Bharti is the leading cellular service provider, with an all India footprint covering all 23 telecom circles of the country. It has over 21 million satisfied customers. Bharti Enterprises has been at the forefront of technology and has revolutionized telecommunications with its world class products and services. Established in 1976, Bharti has been a pioneering force in the telecom sector with many firsts and innovations to its credit. Bharti has many joint ventures with world leaders like SingTel (Singapore Telecom); Warburg Pincus, USA; Telia, Sweden; Asian infrastructure find, Mauritius; International Finance Corporation, USA and New York Life International, USA. Bharti provides a range of telecom services, which include Cellular, Basic, Internet and recently introduced National Long Distance. Bharti also manufactures and exports telephone terminals and cordless phones. Apart from being the largest manufacturer of telephone instruments in India, it is also the first company to export its products to the USA. Airtel's journey to leadership began in Delhi in 1995. Since then, Airtel has established itself across India in sixteen states covering a population of over 600 million people. Airtel will soon cover the entire country through a process of acquisitions and green field projects. With a presence in over 1,400 towns, Airtel today has the largest network capacity in the country. In the last nine years Airtel has achieved many firsts and unique records: it was the first to launch nationwide roaming operations, it was the first to cross the one million and the five million customer marks. It was also the first to launch services overseas. There are other 'firsts' credited to Airtel - many of them in the area of innovative products and services. Today, Airtel innovates in almost everything that it presents to the market.

An excellent example is Easy Charge - India's first paperless electronic recharging facility for prepaid customers. As evidence of its fine record, Airtel has also been conferred with numerous awards. It won the prestigious Techies Award for 'being the best cellular services provider' for four consecutive years between 1997 and 2000 - a record that is still unmatched. And in 2003, it received the Voice & Data Award for being 'India's largest cellular service provider', amongst others.As part of its continuing expansion, Airtel has invested over Rs. 1,065 billion in creating a new telecom infrastructure. In 2003/04, Bharti Tele-Ventures earned a gross profit of Rs. 16 billion on revenues of Rs. 50 billion. Bharti Airtel is the largest cellular service provider in India, with more than 135 million subscriptions as of May 2010. With this, Bharti is now the worlds third-largest, single-country mobile operator and sixth-largest integrated telecom operator.

Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. In India, the company has a 24.6% share of the wireless services market, followed by 17.7% for Reliance Communications and 17.4% for Vodafone Essar. In January 2010, company announced that Manoj Kohli, Joint Managing Director and current Chief Executive Officer of Indian and South Asian operations, will become the Chief Executive Officer of the International Business Group from 1 April 2010. He will be overseeing Bharti's overseas business. Current Dy. CEO, Sanjay Kapoor, will replace Manoj Kohli and will be the CEO with effective from 1 April, 2010.

In December 2008, Bharti Airtel rolled out third generation services in Sri Lanka in association with Singapore Telecommunications. SingTel is a major player in the 3G space in Asia. It operates third generation networks in several markets across Asia.

Airtel's operation in Sri Lanka, known as Airtel Lanka, commenced operations on the 12th of January 2009.

In January 2010, it was announced that the Bangladesh Telecommunications Regulatory Commission (BTRC) of The People's Republic of Bangladesh had given Bharti Airtel the go ahead to acquire a 70% stake in the Bangladesh business of Abu Dhabi based Wired Telecom. The latter had till date invested a total of $600 million, with plans to bring their Bangladesh investments to the $1 billion mark. Airtel's 70% stake in the company is said to be at a cost of an initial $300 million.

Until September 18, 2004, Bharti provided fixed-line telephony and broadband services under the Touchtel brand. Bharti now provides all telecom services including fixed-line services under a common brand "Airtel".

On 19 October 2004 Airtel announced the launch of a BlackBerry Wireless Solution in India. The launch is a result of a tie-up between Bharti Tele-Ventures Limited and Research in Motion (RIM).

On 9 October 2008, Airtel joined the DTH bandwagon in India with Airtel Digital TV, a direct to-Home Television service.

The Apple iPhone 3G was rolled out in India on 22 August 2008 via Airtel & Vodafone. Both the cellular service providers rolled out their Apple iPhone 3GS in the first quarter of 2010. However, high price and contract foundation again made it nearly impossible for both the service providers to make it a success as much as the iPhone is successful in other markets of the world.

In May 2008, it emerged that Bharti Airtel was exploring the possibility of buying the MTN Group, a South Africa-based telecommunications company with coverage in 21 countries in Africa and the Middle East. The Financial Times reported that Bharti was considering offering US$45 billion for a 100% stake in MTN, which would be the largest overseas acquisition ever by an Indian firm. However, both sides emphasize the tentative nature of the talks, while The Economist magazine noted, "If anything, Bharti would be marrying up," as MTN has more subscribers, higher revenues and broader geographic coverage. However, the talks fell apart as MTN group tried to reverse the negotiations by making Bharti almost a subsidiary of the new company.

In May 2009, Bharti Airtel again confirmed that it is in Talks with MTN and companies have now agreed discuss the potential transaction exclusively by July 31, 2009. Bharti Airtel said in a statement "Bharti Airtel Ltd is pleased to announce that it has renewed its effort for a significant partnership with MTN Group".

Talks eventually ended without agreement, some sources stating that due to the South African government opposition.

On 14, February 2010 a statement issued exclusively to the Ghana News Agency by Zain Ghana, said "the Board of Directors of Kuwait's Zain Group, after its meeting on February 14, 2010, issued a resolution to accept a proposal received from Bharti Airtel Limited (Bharti) to enter into exclusive discussions until 25 March 2010, regarding the sale of its African unit, Zain Africa BV." The offer was for $10.7 billion.

"This potential transaction does not include Zain's operations in Morocco and Sudan and remains subject to due diligence, customary regulatory approvals and signing of final transaction documentation," Bharti said. The deal would provide Bharti access to 15 more countries in the region, adding around 40.1 million subscribers to its already 125 million-plus user base. With Bharti already having presence in five overseas markets, after the deal, it would increase its global presence across 20 regions. The combined revenue of the two entities would be around $12 billion.

Recently a shareholder of Zain Nigeria, Broad Communications, secured an injunction against the company from managing its subsidiary in that country because Zain was destroying shareholder value. Experts have said the developments in Nigeria could have implications for the Bharti acquisition.

Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of the Champions League Twenty20 cricket tournament. The tournament itself is named "Airtel Champions League Twenty20." As of May 18, 2010 3G spectrum Bid has ended and Airtel plans to launch the nationwide 3G services in India in the second quarter of 2010.

The Airtel subscriber base according to COAI - Cellular Operators Association of India as of January 2010 was:

y y y y y y y y y y y y y y y y y y y y y y

Chennai - 4,656,675 Delhi - 1,822,208 Mumbai - 3,003,201 Kolkata - 2,746,100 Madhya Pradesh - 6,212,992 Gujarat - 5,112,601 Andhra Pradesh - 12,425,791 Karnataka - 12,153,094 Tamil Nadu - 8,033,771 Kerala - 3,076,728 Punjab - 4,581,187 Maharashtra - 6,518,134 Uttar Pradesh - 3,653,016 Uttar Pradesh East - 8,462,726 Rajasthan - 9,925,141 West Bengal & Andaman and Nicobar Islands - 5,070,213 Himachal Pradesh - 1,273,922 Bihar - 10,338,828 Orissa - 3,836,091 Assam - 2,194,310 North East. States - 1,357,383 Jammu and Kashmir - 1,804,047

The total is 131,714,243 or 32.86% of the total 404,349,733 GSM mobile connections in India till December 2009; and presently the Number 1 operator in India.

On the 9th of May, 2009 Airtel signed a major deal with Manchester United Football Club. As a result of the deal, Airtel gets the rights to broadcast the matches played by the team to its customers.

CORPORATE STRUCTURE:

The Company is a part of Bharti Enterprises, and is India's leading provider of telecommunications services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - mobile services, broadband & telephone services (B&T) & enterprise services. The mobile services group provides GSM mobile services across India in 23 telecom circles, while the B&T business group provides broadband & telephone services in 95 cities. The Enterprise services group has two sub-units - carriers (long distance services) and services to corporate. All these services are provided under the Airtel brand. It includes: Voice Services Mobile Services Satellite Services Managed Data & Internet Services Managed e-Business Services Voice Services: Bharti Airtel became the first private fixed-line service provider in India. It is now promoted under the Airtel brand. Recently, the Government opened the fixed-line industry to unlimited competition. Airtel has subsequently started providing fixedline services in the four circles of Delhi, Haryana, Madhya Pradesh, Karnataka, Tamil Nadu & UP (West). Airtel Enterprise Services believes that these circles have high telecommunications potential, especially for carrying Voice & Data traffic. These circles were strategically selected so as to provide synergies with Airtels long distance network and Airtels extensive mobile network. Airtel Enterprise Services, India's premium telecommunication service, brings to you a whole new experience in telephony.

From integrated telephone services for Enterprises and small business enterprises to user-friendly plans for Broadband Internet Services (DSL), we bring innovative, cost-effective, comprehensive and multi-product solutions to cater to all your telecom and data needs. Voice - Product Portfolio Airtel Enterprise Services telephone services go beyond basic telephony to offer our users a whole host of Value Added Services as well as premium add-ons. Each telephone connection from Airtel Enterprise Services is backed by a superior fibre-optic backbone for enhanced reliability and quality telephony. Few of the Value Added Services offered are Calling Line Identification, Three Party Conferencing, Dynamic Lock, Hunting Numbers, and Parallel Ringing etc. Airtel Enterprise Services Voice Services provide Free Dial-up Internet access that is bundled along with your Telephone connection from Airtel. Its fast, reliable and gives you unlimited Internet access. Mobile Services Airtels mobile footprint extends across the country in 21 telecom circles. Its service standards compare with the very best in the world. In fact, thats how Bharti has managed to win the trust of millions of customers and makes it one of the top 5 operators in the world, in terms of service and subscriber base. The company has several Firsts to its credit: The First to launch full roaming service on pre-paid in the country. The First telecom to launch 32K SIM cards. The First in Asia to deploy the multi brand feature in a wireless network for efficient usage of spectrum. The First to deploy Voice Quality Enhancers to improve voice quality and acoustics.

The First telecom company in the world to receive the ISO 9001:2000 certification from British Standards Institute Satellite Services Airtel Enterprise Services provides you connectivity where ever you take your business Our Satellite Services bring you the benefits of access in remote locations. Airtel Enterprise Services is a leading provider of broadband IP satellite services and DAMA/PAMA services in India. Our solutions support audio, video and voice applications on demand. Satellite Services include: PAMA/DAMA BIT - Internet VPN Satellite based IPLCs for redundancy reasons Managed Data & Internet Services Airtel Enterprise Services brings you a comprehensive suite of data technologies. So we are able to support all types of networks and ensure our customers can migrate their network to the future seamlessly. Our Managed Data & Internet services make our customers future proof.

Managed Data & Internet Services include: MPLS ATM FR Internet IPLC Leased Lines Customized Solutions International Managed Services Metro Ethernet Managed e-Business Services Airtel Enterprise Services, offers an internationally benchmarked, carrier class hosting, storage and business continuity services. A range of services that help to keep your business running the way you want- 24x7. Thanks to our world-class high tech Data Centers. Managed e-Business Services include: Co-lo: Dedicated and Shared BCRS Services & Web hosting.

INDUSTRY OVERVIEW:
A midst all the talk of slowdown in the Indian economy, telecom is one sector that has had a fairly good year in terms of subscriber additions and revenue growth in 2008.Mobile service companies have managed to add subscribers at the rate of eight million a month in 2008. This makes India the second fastest growth for mobile services in the world. However, even as this gives some reason to cheer for the telecom incumbents, there are a few trends in key metrics of the companies that suggest increasing pressure on margins.

This is not the situation only this year the subscriber base of Indian telecom industry is increasing day by-day and year by year. If we just have a glance on the Indian telecom industry it is divided into 23 circles spread all over the country with 9 Operators in the country.

A large population, low telephony penetration levels, and a rise in consumers' income and spending owing to strong economic growth have helped make India the fastest-growing telecom market in the world. The first and largest operator is the state-owned incumbent BSNL, which is also the 7th largest telecom company in the world in terms of its number of subscribers. BSNL was created by corporatization of the erstwhile DTS (Department of Telecommunication Services), a government unit responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Telecom, Tata Indicom, Vodafone, MTNL, Idea, Vodafone and BPL have entered the space as Major Operators in India. However, rural India still lacks strong infrastructure.

In 2007, an article by Business week magazine reported that India's mobile phone market is the fastest growing in the world, with companies adding some 6 million new customers a month.

The total number of telephones in the country crossed the 300 million mark on June 18 2008. The overall telephone-density has increased to 36.98% in March 2009. In the wireless segment, 15.87 million subscribers have been added in March 2009. The total wireless subscribers (GSM, CDMA & WLL (F)) base is more than 391.76 million now. The wire line segment subscriber base stood at 38.22 million with a decline of 0.13 million in October 2008.

Strengths:

y y y y y y y

Cost advantage Current leaders in quality service Largest distribution network Ability to constantly innovate Highly skilled workforce Entrepreneurial zeal Airtels increased equity and market cap.

Weakness:

y y y y y

To prove credibility Price pressures Need for Government support Awareness Sales and Marketing

Opportunities: y y To sustain passion and commitment Airtels market share increasing at other service provider expense. Thus opportunity to wipe it out. y y y Attain higher value services Collaborative business needs to be explored Vertical repeatable solutions.

Threats: y Foreign investment y y y y Global trends moving from GPS to WLL. Lack of global parity in telecom tariff Other competition Low penetration level in rural markets.

Vision:

By 2010 Airtel will be the most admired brand in India:

 Loved by more customers  Targeted by top talent  Benchmarked by more businesses To build India's finest business conglomerate by 2020 Supporting education of underprivileged children through Bharti Foundation Strategic Intent:

y y y

 To create a conglomerate of the future by bringing about Big Transformations through Brave Actions.

Mission:

Mission of Airtel is

We at Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more.

Core values:

y y y

Empowering People - to do their best Being Flexible - to adapt to the changing environment and evolving customer needs Making it Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit

y y

Openness and transparency - with an innate desire to do good Creating Positive Impact with a desire to create a meaningful difference in society.

LITERATURE REVIEW:

Financial statements are prepared primarily for decision making. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statement is not an end in itself as no managerial can be drawn from these statement alone. However, the information provided in the financial statement is of immense use in making decision through analysis and interpretation of financial statements. Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the item of the balance sheet and the profit and loss account. There are various methods used in analyzing financial statements, such as comparative statements, trend analysis, common-size statement, schedule of change in working capital, funds flow and cash flow analysis, cost-volume-profit analysis and ratio analysis. The term financial analysis, also known as analysis and interpretation of financial statement, refers to the process of determining financial strengths and weaknesses of the firm of the firm by establishing strategic relationship between the item the balance sheet, profit and loss account and other operative data. Financial analysis is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firms position and performances According to Metcalf and Titard Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by single set-of statements and a study of the trend of these factors as shown in a series of statement.

According to Myers The term financial statement analysis include both analysis and interpretation. The analysis and interpretation of financial analysis statements is essential to bring out the mystery behind the figure in financial statements. Financial statement is an attempt to determine the significance and meaning of the financial statement data so the forecast may be made of the future earning, ability to pay interest and maturities and profitability of a sound dividend policy. Types of Financial Analysis I can classify various types of financial analysis into different categories depending upon (i) The material used, and (ii) the method of operation followed in the analysis or the modus operandi of analysis. (i) On the basis of material used: According to material used, financial analysis can be of two types (a) external analysis and (b) internal analysis. a. External Analysis: This analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. These outsiders include investors, potential investors, creditors, potential creditors, government agencies, credit agencies and the general public. For financial analysis, this external party to the firm depends almost entirely on the published financial statement. External analysis, thus serves only a limited purpose. However, the changes in the government regulations requiring business firm

makes available more detailed information to the public through audited accounts have considerably improved the position of the external analysis.

b. Internal Analysis: The analysis conducted by persons who have access to the internal accounting records of a business firm is known as internal analysis. Such an analysis can, therefore, be

performed by executive and employees of the organization as well as government agencies which have statutory powers vested in them. Financial analysis for managerial purpose is the internal type of analysis that can be affected depending upon the purpose to be achieved. (ii) On the basis of modus operandi: According to the method of operation followed in the analysis financial can also be of two types: (a) horizontal analysis (b) vertical analysis. a. Horizontal Analysis: Horizontal analysis refers to the comparison of financial data of a company for several years. Thus figure for this type of analysis are presented horizontally over a number of columns. The figures of the various years are compared with standard or base years. A base year chosen as beginning point. This type of analysis is also called Dynamic Analysis as it is based on the data from year to year rather than on data of any one year. The horizontal analysis makes it possible to focus attention on items that have changed significantly during the period under review. Comparison of an item over several periods with a base year may show a trend developing. Comparative statement and trend

percentages are two tools employed in horizontal analysis. However, it may be used along with horizontal analysis to make it more effective and meaningful.

b. Vertical Analysis: Vertical analysis refers to the study of relationship of the various items in the financial statements of one accounting period. In this types of analysis the figure from financial statement of a year are compared with a base selected from the same years statement. It is also known as Static Analysis. Common-size financial analysis statement and financial ratio are the tools employed in vertical analysis. Since vertical analysis considers data for one time period only, it is not conducive to a proper analysis of financial statements. However, it may be used along with horizontal analysis to make it more effective and meaningful.

Procedure of Financial Statements There are three steps involved in the analysis of financial statements. These are: (i) selection (ii) classification (iii) interpretation, the first step involves selection of information (data) relevant to the purpose of analysis of financial statements. The second step involved is the methodical classification of the data and the third step include drawing and conclusions. The following procedure is adopted for the analysis and interpretation of financial statements: 1. The analysis should acquaint himself with the principal and postulates of accounting. He should know the plans and policies of the management so that he may be able to find out whether these plans properly executed or not.

2. The extent of analysis should be determined so that the sphere of work may be decided. If the aim is to find out the earning capacity of the enterprise than analysis of income statement will be undertaken. On the other hand, if financial position is to be studied then balance sheet analysis will be necessary. 3. The financial data given in the statement should be re-organized and rearranged. It will involve the grouping of similar data under same heads, breaking done of individuals components of statements according to nature. The data is reduced to a standard form. 4. A relationship is established among financial among financial statements with the help tools and techniques of analysis such as ratio, trends, common size, funds flow etc. 5. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decision taking. 6. The conclusions drawn from interpretation are presented to the management in the form if reports.

Methods or Devices of Financial Analysis The analysis and interpretation of financial statements is used to determine the financial position and result of operation as well. A number of methods or devices are used to study the relationship between different statements. An effort is made to use those devices which clearly analysis position of the enterprise. The following methods of analysis are generally used: y y y Comparative Statement Trend analysis Common Size Statement

y y y y .

Cash Flow Analysis Funds flows Ratio analysis Cost volume - Profit analysis

Comparative Statement: Comparative balance sheet analysis is the study of the trend of the same items, group of item and computed item in two or more balance sheets of the same business enterprise on different data. Trend analysis: This method determines the direction upwards and involves the computation of the percentage relationship that each statement item bears to the same item in base year.

Common size Statement: The common size statements balance sheet statements are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities and total sales. Total assets are taken as 100 and different assets are expressed as a percentage of the total, similarly various liabilities are taken as a part of total liabilities. Cash flow Statement: Cash flow statement is a statement which describes the inflow (sources) and outflow (uses) of cash and cash equivalent in an enterprise during a specified period of time. Ratio Analysis: Ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions.

Cost Volume Profit Analysis: Cost Volume Profit Analysis is a technique for studying the relationship between cost, volume and profit. Profit of an understanding depends upon a large number of factors. But the most important of these factors are the cost of manufacture, volume of sales and the selling prices of the product.

Comparative Statements The comparative financial statements of the financial position at different positions in a particular time. The elements of financial position are shown in a comparative form so as to given an idea of financial position at two or more periods. Any statement prepared in a comparative form will be covered in comparative statements. From practical point of view, generally two financial statements (balance sheet and income statement) are prepared in comparative form for financial analysis purpose. Not only the comparison of the figures of two financial position and operative results. The comparative statement show: Absolute figures (rupee amounts) Changes in absolute figures i.e., increase or decrease in absolute figures. Absolute data in terms of percentages. Increase or decrease in terms of percentages. The financial data will be comparative only when same accounting principles are used in preparing these statements. In case of any deviation in the use of accounting principles this fact must be mentioned at the foot of financial statements and the analyst should be careful in using these statements. The two comparative statements are (i) Balance sheet, and (ii) income statement.

Comparative Balance Sheet The comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheet of the same business enterprise on different dates. The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning at the end of period and these changes can help in forming an opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increases in figures. The fourth column may be added for added for giving percentages of increases or decrease.

CHAPTER 4:

DATA ANALYSIS:

Table 1

DATA INTERPRETATION:

From the above balance sheet of 2006 & 2007 the major changes were found in the

Particulars

Values 2006

for Values 2007

for Difference (Increase /Decrease) 62987570 14911831 31455077 16543246 138802 20549 25969232 300701 4730320 Increase Increase Increase Increase Decrease Decrease Increase Decrease Decrease

Percentage of change 48.426 50.475 46.953 24.694 1.928 0.1085 90.69462 169.462 153.867

Fixed assets Current assets Current Liabilities

193056341 29542935 66991634

130068771 44454766 98446711 53991945 7058179 18959342 2664475 478145 7804605

Net current 37448699 assets Investments Share capital Secured loans Inventory 7196981 18938793 28633707 177444

Cash & Bank 3074285 Balances

Table 2

FINDINGS: y The changes in the fixed assets were due to the capital work in progress it includes Capital advances of 2, 00,443 and the other reasons are fluctuations of foreign exchange rates, Buying computers. y The investments are done in the different areas like Government securities, Mutual funds and Debentures. y The changes in current assets were due to the Debit outstanding for period exceeds six months, Advances and loans given to subsidiary companies like Bharti comtel, Airtel (USA), Bharti Hexacom, Bharti Broadband Ltd. y The changes in current liabilities are due to the outstanding due of small scale industries undertakings, Advance received form customers is decreased and Advance Billing. y The change in the share capital is due to a) 1,516,390,970 Equity Shares issued as fully paid up bonus shares out of Share premium account. b) 20,088,445 Equity Shares are allotted as fully paid up upon the conversion of OCRD without payment being received in cash. c) 19,591,420 Equity shares are allotted as fully paid up on the conversion of FCCBs d) 2,772,125 Equity Shares are allotted as fully paid up under the scheme of amalgamation without payments being received in cash. y The loans in above balance sheet were secured from banks as advances and also as term loans and vehicle loans y The inventory i.e. Stock in-Trade was increased.

Table 3

DATA INTERPRETATION:

From the above Profit and loss statement of 2006 & 2007 the major changes were found in the

Particulars

Values for 2006 11408836

Values for 2007 19214108

Difference

Increase/ Decrease

Percentage

Networking operating Cost of Sales of goods Personnel

7805272

Increase

68.41427118

674043

220849

-453194

Decrease

67.23517639 31.15299677 25.04797433 28.03561386 51.15189505 11.82083613

11263414

7754523

-3508891

Decrease

Sales and Marketing Administrative and Others Other income Finance expense

10691655

8013612

-2678043

Decrease

16609713

11953078

-4656635

Decrease

618980 2558440

935600 2256011

316620 -302429

Increase Decrease

Table 4

FINDINGS: y The Expenditure was increased by 39.783 percent this is due to the inter connect charges, Installation, Power & fuel, Rent, Insurance , Repairs and Maintenance and also due to the Leased line Gate way charges, Increase in the cost of goods sold, Personnel expenditure like salaries, wages, Bonus & Provident fund contribution, Staff welfare and Recruitment and training.

The difference of Network operation is due to the Interconnect Charges and PSTN Rentals, Installation, Power and Fuel, Insurance, Internet Access and Bandwidth Charges.

The change in Personnel is due to the Salaries, wages and Bonus, Contribution of Provident and Other funds, Staff welfare Recruitment and Training.

The change in the sales in the marketing expenditure is because of the Advertisement and Marketing, Sales commission and Incentive, Sim card utilization.

The change in the administrative and other expenditure is due to Legal and professional, Rates and taxes, Power and Fuel, Travelling and conveyance rent, Insurance, Provision for doubtful debts and advances, Collection and recovery expenses.

Table 5

DATA INTERPRETATION:

From the above Balance sheet of 2007 & 2008 the major changes were found in the

Particulars Fixed assets Current assets Current Liabilities Net current assets Investments Secured loans Inventory Share capital Cash and Bank Balances

Values for 2007 193056341 44454766 98446711 53991945 7058179 2664475 478145 18959342 7804605

Values for 2008 190306475 62510110 121100901 58590791 109528528 524244 568607 18979074 5029390

Increase/ Difference Decrease 2749866 18055344 22654190 4598846 102470349 2140231 90462 19732 2775215 Decrease Increase Increase Increase Increase Decrease Increase Increase Decrease 1.42438522 40.6150917 23.0116270 8.51765203 1451.79583 80.3246793 18.9193654 0.10407534 35.5586861 Percentage

Table 6

FINDINGS:

The changes that took place in fixed assets are due to the capital work in progress i.e. capital advances and it also includes goods in transit and also for the license fees for unified access service for long distance for 7 to 17 years and 14 years.

The increase in current assets includes Goods in transit Rs.23,408 and also Net of Provision for diminution in value Rs. 43,113 and also for Interest Acquired on Investment and Advances in cash

The current liabilities are increased due to the advances to companies and also for Fringe benefits tax, warranty and wealth tax.

Investments in 2008 Increased due to the investment in Govt. securities, Mutual funds, Debentures and Bonds and also in IFFCO Kissan Sanchar Ltd of 100,000 equity shares.

The changes in the share capital was due to

a) 1,516,390,970 Equity Shares issued as fully paid up bonus shares out of Share Premium account. b) 20,088,445 Equity Shares are allotted as fully paid up upon the conversion of Optionally Convertible Redeemable Debentures without payment being received in cash. c) 21,315,734 Equity Shares are allotted as fully paid up opon the conversion of Foreign Currency Convertible bonds. d) 2,722,125 Equity Shares are allotted as fully paid up under the scheme of amalgamation without payments being received in cash.

Table 7

DATA INTERPRETATION:

From the above Profit and loss statement of 2007 & 2008 the major changes were found in the

Particulars Profit before tax Total Income Expenditure Profit after tax Network Operating Cost of goods sold Sales and Marketing

Values for 2007 46013712 177944343 88958316 40332265 19214108 220849 10691655

Values for 2008 69725423 257035096 124349012 62441922 33004746 338502 17849080

Increase/ Difference Decrease 23711711 79090753 35390696 22109657 13790638 117653 7157425 Increase Increase Increase Increase Increase Increase Increase 51.53183686 44.44690495 39.78345993 54.81878342 71.77350101 53.27305082 66.94403252 Percentage

Table 8

FINDINGS:

The Expenditure was increased by 45.064 percent this is due to the inter connect charges, Installation, Power & fuel, Rent, Insurance , Repairs and Maintenance and also due to the Leased line Gate way charges, Increase in the cost of goods sold, Personnel expenditure like salaries, wages, Bonus & Provident fund contribution, Staff welfare and Recruitment and training

The difference of Network operation is due to the Interconnect Charges and PSTN Rentals, Installation, Power and Fuel, Insurance, Internet Access and Bandwidth Charges.

The increase in the cost of goods sold is due to the opening stock addition of purchases, internal issues. Net provision for diminution in value of 30,824 thousand.

The change in the sales in the marketing expenditure is because of the Advertisement and Marketing, Sales commission and Incentive, Sim card utilization.

Revenue graph:

Figure 1

Data interpretation: From the above graph for revenue of Airtel the interpretations are

a) There was a loss of Rs.2051million in the year 2003 and revenue was Rs. 30,554 million in the same year. b) Thereafter there is a gradual increase in the in both the revenue and profit year after year.

FINANCIAL PERFORMANCE:

Figure 2

Data interpretation: In this I got that in earnings of Airtel are going higher and higher only in year by year. But in pricing Airtel make some strategies like when there is a season than they applied some good offers by minimizing their tariff plans and attract the customers in a significant manner by this Airtel become no.1 telecom sector against all. They also provide dividend and share profits with their stake holders and shareholders in all years.

CHAPTER 5:

CONCLUSION:

The conclusion of my study is that Airtel had created a very good image on the mind of the new users of cellular services. Airtel is successful in capturing the highest market share by adopting Celebrity Endorsement Strategy. Thats why the Airtel has a market share of 47% in A.P. and become a favorite service provider to the customers. The Airtel is now become no. 1 telecomm in India. The financial position of Airtel is going better and better in year by year, that are why now, Airtel is earning 7% total income in 2010. According to me, Airtel is the best service provider in the entire telecom sector and I am really happy to become a part of this great company.

CHAPTER 6: BIBLIOGRAPHY:

Management accounting Shashi k. Gupta & R. k. Sharma Financial management T. S. Grewal Research paper: y y y y Business line Hindu Times of india Economic times

Magazines: y y Business standard Business world

Websites: www.moneycontrol.com www.wikipedia.com www.scribd.com www.airtel.in www.indiantimes.com www.authorstream.com

Annual reports of Airtel 2006 to 2008 Departmental records